What are the laws for tenants renting a forclosure scheduled for auction?

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What are the laws for tenants renting a forclosure scheduled for auction?

Asked on June 26, 2015 under Real Estate Law, Illinois

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Federal law gives protection to a tenant in the event that their rental unit is foreclosed on. When a home goes into foreclosure, tenants who have a written lease can continue to occupy the home until the end of the lease term, or 90 days, whichever is longer. The one exception to this is if the new owner intends to move in and occupy the home as their primary residence. In that case, a 90 day notice to move applies. Tenants with a month-to-month lease or no lease at all, must be given a minimum 90 days notice to move.

Note: When state law provides more protection than the federal law, then state law applies.

That having been said, although a foreclosure action has already been filed, as long as the landlord remains the owner of record the tenant must continue to pay rent to them until title to the property passes at auction. After this time the landlord is no longer be the legal owner. The tenant should then be informed where to send their rental payments by the new owner/landlord.

As for the return of the security deposit, when a property is foreclosed on there may not be much that a tenant can do. Typically a tenant’s only legal recourse is to sue their former landlord in small claims court.


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